Shell, Virent form joint venture to convert crops to biogasoline

Published 7:00 pm, Tuesday, March 25, 2008

Royal Dutch Shell PLC said Wednesday it has formed a 5-year partnership with U.S.-based Virent Energy Systems Inc. to use plant sugars to produce a fuel closely resembling gasoline.

Shell said the pact signals that the companies want to bring the product toward large-scale production quickly after testing. However, they declined to give firm deadlines for development, or release details of how much money they're investing in the project.

Shell, Europe's largest oil company, reported $8.47 billion of earnings on sales of $107 billion in the fourth quarter.

Virent, based in Madison, Wisconsin, has received $10 million in U.S. government aid and $40 million in venture capital backing. Its BioForming technology uses catalysts to convert plant sugars into the hydrocarbon molecules like those produced at a petroleum refinery, instead of fermenting them into ethanol, a form of alcohol, the company said.

Graeme Sweeney, Shell's head of biofuels arm, said Shell has "quadrupled" its expenditure on biofuel development "in the recent past," but declined to say from what base. He said Shell forecasts that as much as 10 percent of fuel used globally may be biofuel by 2030.

He cited several advantages to Virent's technology over current methods of producing ethanol. One is that it can create fuel that be used as if it were normal gasoline, or in high-percentage blends with gasoline _ potentially eliminating the need for specialized infrastructure and new engine designs required for cars running on pure ethanol.

The companies also believe the technology is flexible enough that it can create fuel from a variety of plants _ including grasses _ and even mix together different sources.

That would make it easier to build production facilities in different parts of the world using local crops, and avoid competing with wheat, sugarcane and corn, which are relatively expensive and used for human food.

"We envision that that will give us an advantage long range in sustainable scaling of the technology by using nonfood-based feedstocks," said Virent co-founder Randy Cortright on a conference call.

Sweeney said the companies' next step would be two years of further testing followed by the possible construction of a 'demonstration conversion plant' _ about one quarter of the size of a full scale commercial plant.